January 11, 2011

Lawmakers send governor major Illinois income tax increase

SPRINGFIELD — Democratic state lawmakers muscled through a major income tax increase early Wednesday that they said would rehabilitate the state’s deadbeat image, but Republicans predicted it would drive businesses out of state.

With no votes to spare and no Republicans on board, the House approved the plan to hike the personal income tax-rate by 67 percent and the business income tax by 46 percent. The plan nearly faltered in the Senate hours later when black lawmakers balked at the House’s decision to remove a property-tax relief component from the plan and failure to approve a cigarette tax hike for schools.

But after a late evening closed-door meeting of several black lawmakers with Gov. Pat Quinn, a fellow Democrat, an agreement was reached and the Senate approved the tax increase plan 30-29 without a vote to spare shortly before 1:30 a.m. The action came as a new General Assembly was to be sworn in midday Wednesday, replacing a handful of departing Democratic lawmakers whose support was counted on for the tax plan.

“We have just come through the worst economic crisis in our lifetime…and we have not paid our bills,” Senate President John Cullerton, D-Chicago, told lawmakers shortly before the vote. “We are going to have to cut…even with this tax. We’re going to have to spend less money then we have in the last two years. And it’s going to be tough. But we are going to have our bills paid.”

Republicans in both the House and Senate voted against the plans, arguing the measure would hurt businesses and regular people while not doing enough to cut spending.

“So here we are in the very end of this lame duck session on a late night putting more burden on the hardworking people of this state,” said Sen. Kyle McCarter, R-Lebanon. “Here’s an investment tip, put a lot of money into moving vans.”

“You may think your stabilizing this budget but you’re not,” said Sen. Matt Murphy, R-Palatine. “You’re bankrupting our state with this bill.”

The Senate debate was interrupted shortly before 1 a.m. when a state lawmaker collapsed on the floor of the chamber. State Rep. David Miller, D-Lynwood, was watching the debate near state Sen. James Meeks, D-Chicago, when he collapsed as Republican leader Christine Radogno was making what was expected to be one of the final speeches of the night.

Medical personnel and concerned lawmakers clustered around Miller and then took him out on a stretcher. He appeared to be conscious when he was wheeled out to a waiting ambulance, and the debate resumed.

Radogno went on to say she was glad Democrats were "owning" the blame for the state's dismal budget situation, but she said the spending restrictions in the bill were not good enough.

Earlier in the night the House, expected to be the more difficult place to gain traction, approved the tax measure 60-57.

Democratic House Speaker Michael Madigan chided Republicans for their refusal to support the proposal, after he and Democratic leaders who control the Senate spent days negotiating the size and scope of the tax plans behind closed doors with Quinn.

“They're on the sidelines,” Madigan said of Republicans. “They don't want to get on the field of play.”

The Senate, which approved a similar-size tax hike in May 2009 with more of the proceeds going to education, was temporarily hung up over the concerns of the black caucus. But after a meeting with Quinn, Sen. Kimberly Lightford, D-Maywood, said education funding had been “worked on” with Quinn.

Sen. Emil Jones III, D-Chicago, said black senators received a promise from Quinn that he would designate $250 million more to education over each of the next four years. The money would be generated by the increased income tax and had originally been designated for property tax relief. The final bill eliminated the property tax relief, freeing up those funds, Jones said.

The tax votes were the latest demonstration of a Legislature that has turned increasingly liberal since the November election, coming in the wake of a death penalty ban approved Tuesday and civil unions for gay and straight couples approved last month.

Senators also gave final approval to a House passed plan that would allow the state to borrow nearly $4 billion to make its annual payment for public employee pensions. The House approved the plan last year.

UPDATED at 1:07 a.m. with Senate debate interrupted when lawmaker collapses; will be updated.

SPRINGFIELD--The state Senate debate over an income tax increase was interrupted shortly before 1 a.m. today when a state lawmaker collapsed on the floor of the chamber.

State Rep. David Miller, D-Lynwood, was watching the debate near state Sen. James Meeks, D-Chicago, when he collapsed as Republican leader Christine Radogno was making what was expected to be one of the final speeches of the night.

Medical personnel and concerned lawmakers clustered around Miller. After he was wheeled out to a waiting ambulance, the debate resumed.

Before the emergency, Democratic Senate President John Cullerton of Chicago had opened the debate by saying the tax increase was needed to pay the state's bills.

"We have just come through the worst economic crisis in our lifetime…and we have not paid our bills,” Cullerton told lawmakers. “We are going to have to cut…even with this tax. We’re going to have to spend less money then we have in the last two years. And it’s going to be tough. But we are going to have our bills paid.”

But Republicans argued the measure would hurt businesses and regular people while not doing enough to cut spending.

“So here we are in the very end of this lame duck session on a late night putting more burden on the hardworking people of this state,” said Sen. Kyle McCarter, R-Lebanon. “Here’s an investment tip, put a lot of money into moving vans.”

“Stop this disastrous plan,” McCarter said.

SPRINGFIELD--Members of the Senate black caucus left Gov. Pat Quinn's office late Tuesday night with word of a possible agreement that could lead to Senate vote on the House-passed income-tax increase.

Some senators were cool to the bill after the House did not pass a provision to raise cigarette taxes, which would boost education funding, but Sen. Kimberly Lightford sounded an optimistic note when she left Gov. Pat Quinn's office shortly before 11 p.m.

"We have an opportunity to get it done, yes," Lightford said. She said education funding had "been worked on" in discussions with Quinn.

The Senate clerk called all senators to the floor shortly after 11 p.m., with a vote on the tax bill likely in the offing.

UPDATED at 10:43 p.m. by Rick Pearson and Monique Garcia; some Senate Democrats wary of House-approved tax plan; will be updated.

SPRINGFIELD — Democrats pushed ahead on a substantial income tax increase late Tuesday, attempting to rectify Illinois’ deadbeat image with just hours remaining until the reset button is hit on the General Assembly.

With no votes to spare and no Republicans on board, the House sent the Senate a plan to raise the personal income tax 67 percent and the business income tax 46 percent.

Democratic House Speaker Michael Madigan chided Republicans for their refusal to support the proposal, after he and Democratic leaders who control the Senate spent days negotiating the size and scope of the tax plans behind closed doors with Democratic Gov. Pat Quinn.

“They're on the sidelines,” Madigan said of Republicans. “They don't want to get on the field of play.”

The House, expected to be the more difficult place to gain traction, approved the measure 60-57.

The Senate, which approved a similar-size tax hike in May 2009 with more of the proceeds going to education, huddled behind closed doors late Tuesday. With the House taking out a property tax relief component and failing to approve a cigarette tax increase for schools, it remained in doubt whether the 37 Senate Democrats would provide the 30 votes needed to send the tax hike plan to Quinn.

Sen. Kimberly Lightford, D-Maywood, said the “black caucus is pretty much a ‘present’ vote at this time.”

Lightford and other members of the Senate black caucus entered Quinn's office at the statehouse late Tuesday night to discuss their concerns.

The House vote is the latest demonstration of a Legislature that has turned increasingly liberal since the November election, coming in the wake of a death penalty ban approved Tuesday and civil unions for gay and straight couples approved last month.

Quinn and Democratic legislative leaders raced to move the tax plan, which would raise the personal tax rate from 3 percent to 5 percent, before a new Legislature with fewer Democrats is seated. At least seven lame-duck Democrats, who will be out of office Wednesday, voted for it.

“Illinois is in crisis, absolute financial crisis, and there is no way we can dig ourselves out of the crisis without increased revenues,” said House Majority Leader Barbara Flynn Currie, D-Chicago. “There is no way, no way, we can cut our way out of the deficit we face.”

But Republicans argued that Democrats who have controlled state government since 2003 should make stringent budget cuts before seeking a massive income tax hike during a struggling economy.

“I can’t figure out how this plan does anything for our real problems. Our real problem is spending, the increased spending, the mentality that we have,” said Rep. Roger Eddy, R-Hutsonville. “We’ll continue to throw money into a hole that has no bottom.”

House Democrats twice failed to get the required support from Republicans to approve a massive $8.75 billion borrowing plan aimed at using a portion of new income tax revenue to pay billions of dollars in overdue bills. The measure needed 71 votes because it added to the state’s debt, but it got only 65 votes on a first ballot and 68 on a second.

Sponsoring Rep. Frank Mautino, D-Spring Valley, said failure to pass the borrowing plan would mean it would take up to eight years to pay off providers of state services who have waited months for their money.

Prospects for the tax hike had been questionable throughout the Legislature’s final day as Quinn held a number of one-on-one meetings with rank-and-file lawmakers, seeking votes needed to pass the tax package. Quinn entered the House chamber shortly after the vote to thank representatives who voted for the plan.

House passage of the income tax hike came after representatives voted 66-51 against a plan to boost the state’s 98-cent-per-pack cigarette tax by $1.01. The cigarette tax hike would have been earmarked to provide more than $300 million in new spending for schools, a provision sought by African-American lawmakers in exchange for their backing of a higher income tax.

In trying to sell the tax package, supporters sought to portray a sense of urgency, saying the failure to act to fill a $15 billion budget deficit, including a looming $8 billion in overdue bills, would lead to the state teetering into insolvency, its bond rating reduced to junk status.

“Everybody wants to go to heaven, but nobody wants to die,” said Rep. David Miller, D-Lynwood, whose unsuccessful bid for state comptroller meant Tuesday was his last day in the Legislature.

Under the proposal, the current 3 percent personal income tax rate would go to 5 percent until 2015, when it would drop to 3.75 percent. To gain more support among lawmakers, the plan would further lower the tax rate in 2025 to 3.25 percent.

For businesses, the current 4.8 percent corporate rate would go to 7 percent until 2015, when it would drop to 5.25 percent.

The plan calls for the corporate rate to fall in 2025 to the current 4.8 percent.

The tax increases, which would take effect retroactively to Jan. 1, would raise an estimated $6.5 billion over a full-year period.

In addition, the measure would attempt to limit spending in each of the next four budget years — $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015. The state’s auditor general would determine if lawmakers and the governor exceed those spending limits. If the limits are exceeded, the higher income tax rates would revert to current levels.

“This is not a game, not a trick. It’s a real spending cap,” said Senate President John Cullerton, D-Chicago. “We’re really trying to handcuff ourselves and the governor in our spending.”

But Republicans contended the limits would still allow growth in spending at a rate of 2 percent a year over the next four years, rather than require specific cuts to programs in the state budget.

On Tuesday, the House also rejected a measure Quinn wanted that would have allowed the governor to appoint a new chairman for the Regional Transportation Authority. The members of the RTA board currently select the chairman.

Quinn also inserted a provision in the bill so that it would have required Metra trains to have defibrillators and offer wireless Internet access. Quinn currently faces a measure that would end the free rides for seniors program except for those who are low income or disabled. He has supported the program in the past.

SPRINGFIELD --- The Illinois House tonight passed a major income-tax increase with Democratic votes and Senate Democratic leaders were expected to act on the plan as well tonight, with lawmakers saying they have to act now to help fix the state's woeful money situation.

The tax hike got 60 votes, the minimum needed to get it over to the Senate, which is expected to take up the measure tonight. Another 57 House members voted against the tax increase. The roll call will be posted here.

The House is viewed as the more difficult chamber when it comes to the income-tax hike. In May 2009, the Senate approved its own big tax hike, with the proceeds being divided up differently. Democratic and Republican Senate leaders were meeting with their respective caucuses behind closed doors late tonight.

Democratic Gov. Pat Quinn, who has been largely publicly silent as he and Democratic leaders cobbled together the 60 votes, came to the House chamber for the vote.

Sponsoring Rep. Barbara Flynn Currie, D-Chicago, said it's time for lawmakers to be "adults" and step up and address what could grow to a $15 billion deficit including $8 billion in unpaid bills.

Rep. David Reis, R-Willow Hill, said voters across the country spoke in November, voting for lower taxes and less government. Reis held up a map of Illinois that he said represents how many counties Quinn won in November to show that most of Illinois is against a tax hike, except the three counties Quinn won. "Three-county Quinn," Reis called the governor.

Quinn, who campaigned on a smaller income-tax increase, won Cook County, the state's most populous region, and that propelled him to 47 percent of the vote and victory over Republican Sen. Bill Brady of Bloomington. State Board of Elections totals show Quinn winning four counties: Cook, Alexander, Jackson and St. Clair.

Under the proposal, the current 3 percent personal income tax rate would go to 5 percent until 2015 when it would drop to 3.75 percent. In an effort to gain more support in the legislature, the plan would further lower the tax rate in 2025 to 3.25 percent.

For businesses, the current 4.8 percent corporate rate would go to 7 percent until 2015, when it would drop to 5.25 percent. The plan calls for the corporate rate to fall in 2025 to the current 4.8 level.

The property-tax rebate check concept has been dropped from the income-tax plan. The current 5 percent income-tax credit for property taxes paid by homeowners will continue. The proposal to send homeowners rebate checks of about $325 every year would have cost about $750 million, $250 million more than the current income-tax credit costs.

The income-tax debate came after the House shot down a $1.01-a-pack cigarette-tax increase to provide more money for schools. The measure got 51 votes, but needed 60 to pass.

Time is running out as a new General Assembly gets sworn in Wednesday and the reset button on legislation is hit and several lame-duck lawmakers leave.

Asked if he was disappointed that no Republicans voted in favor of the tax increase, House Speaker Michael Madigan, D-Chicago, said "they're on the sidelines. They don't want to get on the field of play."

The cigarette-tax hike vote came hours after a top aide to Gov. Pat Quinn said the governor is in "full support" of an income-tax increase plan under consideration at the Capitol.

The governor hasn't said much the past week as negotiations continued, but Budget Director David Vaught said Quinn backs the plan.

The tax increase on the table is higher than what Quinn said he supported during last fall's campaign. Back then, Quinn said he wanted to raise the income-tax rate to 4 percent and would veto anything that wasn't his plan --- because his plan was the best plan.

The tax-hike legislation was unveiled today and lawmakers are getting their first formal look. It passed the first of four potential hurdles today as a House committee voted 7-5 to advance it to the full House.

The tax increases, which would take effect immediately, would raise an estimated $6.5 billion over a full-year period.

In addition, the measure would attempt to limit spending in each of the next four budget years --- $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015. The state’s auditor general would determine if lawmakers and the governor exceed those spending limits. If they are exceeded, the higher income tax rates would revert to current levels.

The proposal also would eliminate the current 5 percent income-tax credit for property taxes paid by homeowners and replace it with a direct check. The check would note that it is the result of the “Taxpayer Accountability and Budget Stabilization Act passed by the General Assembly and signed into law by the Governor.”

The measure also would eliminate the ability of corporations to carry net operating losses forward over the next four years, a move worth $250 million to the state. The measure also reinstates the state estate tax, which varies from 10 percent to 16 percent, on estates of $2 million or more. The plan is worth as much as $373 million.

Lawmakers are also considering adding $1 to the state’s current 98-cent per pack tax on cigarettes.

Sponsoring Rep. Barbara Flynn Currie said the tax increase is not about expanding programs but "to get us out of a very deep and unpleasant hole."

Opponents include the Illinois Manufacturers Association and the Illinois Chamber of Commerce.

IMA President Greg Baise said the only businesses who will benefit from a tax hike are movers who will help other buisness pack up and move out of state.

Doug Whitley, president of the Illinois Chamber, said the state needs more fiscal restraint and the spending limits in the plan do not go far enough. He said negotiations have taken place behind doors, and should be a matter for new lawmakers, not the lame duck session trying to push it through.

Vaught said the state is in the "beginning stages" of a shutdown, and that without a tax increase Illinois' bond rating would be classified as junk.

"It's time to act," Vaught said. "It's not time to kick the can down the road any longer."

"Time to act like grownups," Currie said.

Rep. Suzi Bassi, R-Palatine, said that "as a responsible adult" she will vote no because state has not done enough to cut.

"Only in the state of Illinois can we legislate spending our way out of a budget crisis," said Rep. Ed Sullivan, R-Grayslake.

Comments

Impeach Governor Quinn. He lied to all the citizens of Illinois saying would veto any tax increase over 33%. Quinn you have used your office to lie and have made fools of all of us and betrayed Illinois.

The five sponsors of this legislation have a combined 91 years in the House and Senate. These Democrat Legislators are the reason the state is bankrupt. Illinois has a SPENDING problem, not a revenue problem. There is no plan to cut revenue......in fact, they plan to continue raising spending.

Politicians have no problem sending fellow countrymen to die in wars overseas, yet witness how spineless and cowardly the pols behave when called upon to take action against government employee unions to solve state and federal budget crises...

Quinn is a liar. Madigan and Cullerton are weasels for pushing this vote before the people we elected take office tomorrow. Any politician that votes in favor of this enormous tax increase is a weasel too.

If voters didn't see this coming in November and elected Quinn et al back into office, it won't matter 2 or 4 years from now. The unions and Democratic constituencies will continue to vote these guys back in office. Meanwhile as businesses and taxpayers (suckers) who are able move out of this state then the problems will only get worse. Just because rational folks see a need for more spending cuts and minimal new taxes, the Dems in Springfield do not. Tax, tax, tax and tax. Gotta fill the trough for the unions and their backers. Get used to it. This is how it has been and will always be in Illinois. Sigh.

The Tribune really put it to Quinn in their Sunday editorial. He was quoted during the campaign saying that he would veto any tax increases over 33%. I really do think that this one is going to stick to Quinn, Madigan and Cullerton. They could all be famous from this one for the first time in their careers.

All 50 aldermen on the Chicago City Council had to file paperwork earlier this year detailing their outside income and gifts. The Tribune took that ethics paperwork and posted the information here for you to see. You can search by ward number or alderman's last name.

The Cook County Assessor's office has put together lists of projected median property tax bills for all suburban towns and city neighborhoods. We've posted them for you to get a look at who's paying more and who's paying less.

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